Carrier Global (CARR) Q2 FY26 earnings call: guidance and Q&A

Seeking more detail on the drivers of Q2 margin decline (mix vs. price/cost, timing) and the implications of the leadership change in CSE for future performance.

Patrick explained margin decline drivers: favorable volume/price/productivity offset by unfavorable mix (new construction, lower-margin products like battery/solar in Europe, container vs. truck/trailer) and tariff mitigation timing. David emphasized the new CSE President, Thomas Donato, will drive more discipline in pricing and aggressive cost reduction (footprint, supply chain, G&A) to achieve mid-teens operating margins.

“We're going to be a lot more disciplined on the price side, and there's a lot of costs that we have to take out, and that includes footprint, supply chain, G&A.”

asked by Scott Davis · answered by David Gitlin

Clarification on what Carrier is acquiring with 75F (technology, installed base, BMS enhancement).

David stated Carrier is primarily acquiring technology and talent. 75F's AI-enabled, cloud-native, wireless BMS platform expands Carrier's TAM by $20 billion for small-to-medium businesses and international markets, and enhances ALC's capabilities for larger buildings, enabling faster, seamless installations.

“We're buying great technology that not only enables us to attack that market here in the United States for small- and medium-sized buildings, but it's great for an international offering.”

asked by Scott Davis · answered by David Gitlin

Seeking color on the residential market's inflection, specifically if Q2 saw "2-step" effects, current industry volumes, and channel health, and how the "absence of destocking" will impact H2.

David clarified that the "2-step" effect (absence of destocking) will primarily benefit H2, contributing 10 points to the expected mid-teens sales growth. Q2 did not see significant destocking impact. H2 movement is expected to be up mid-single digits, with mid-single-digit price. Field inventory levels are healthy, down 25% YoY.

“We didn't really see them in 2Q. We see them in the back half. We'll get 10 points of that benefit from the absence of destocking in the second half.”

asked by Jeffrey Sprague · answered by David Gitlin

Details on the new data center capacity (revenue run rate, scope, derisking) and how much of the $8 billion backlog is data center-related.

David explained the new U.S. facility will support demand beyond the $2.5 billion FY26 exit rate, focusing on fungible product lines for both data center and non-data center applications. Patrick stated that commercial backlog is 2/3 to 70% of the total $8 billion, and 40% of that commercial backlog is data centers.

“Commercial backlog is about 2/3, 70% of that and 40% of that is data centers.”

asked by Joseph Ritchie · answered by Patrick Goris

Confidence in delivering $1.5 billion data center revenue in H2, given potential customer delays, and how Carrier is mitigating risks.

David expressed high confidence, stating H2 is fully booked, and customers are pushing for accelerated deliveries, not delays. The company is focused on execution, deploying resources to supply chain, supplier quality, and factory quality to ensure perfect quality and delivery for the significant ramp.

“Our commitment to our customers is to be perfect quality, perfect delivery. It's not easy with this kind of ramp that we're seeing, I've lived through ramps like this. So we have all hands on deck to ensure that -- we have the capacity in our own factories, but we're into a level of detail of making sure that we have the right number of brazing people on second shift.”

asked by Varun Govindaraj · answered by David Gitlin

Clarification on the $2 billion FY26 data center sales, $500 million in H1, $1.5 billion in H2, and the $2.5 billion exit rate, as the math implies Q3 could be stronger than Q4.

Patrick clarified that Q4 data center sales will be higher than Q3. The $2.5 billion exit rate is based on Q4 run rate annualized, implying a run rate well north of $2.5 billion if Q4 is multiplied by 4.

“Q4 will be higher than Q3 in data centers. And so if you just take Q4, do that times 4, you get well north of $2.5 billion.”

asked by Andrew Obin · answered by Patrick Goris

Outlook for the China business, particularly its potential for recovery.

David bifurcated China: commercial HVAC is well-positioned with good traction from key customers in data centers, electronics fab, and renewables, supported by a strong partnership with Shanghai Electric. Residential business in China remains soft due to a difficult housing market, and the team is evaluating the required investment and long-term prospects given the headwinds.

“When it comes to the resi business in China, it's been soft for a while. And the housing market is very difficult in China. And what we have to grapple with as a team is what's the investment required to fundamentally improve the business?”

asked by Stephen Volkmann · answered by David Gitlin